LSU and many other public colleges in Louisiana might be forced to file for financial exigency, essentially academic bankruptcy, if state higher education funding doesn't soon take a turn for the better.

Louisiana's flagship university began putting together the paperwork for declaring financial exigency this week when the Legislature appeared to make little progress on finding a state budget solution, according to F. King Alexander, president and chancellor of LSU.

"We don't say that to scare people," he said. "Basically, it is how we are going to survive."

Moody's Investors Service also announced this month that it was lowering LSU's credit outlook from positive to stable based on concerns about the university's overall financial support. The lowering of LSU's credit rating makes it more likely the university will have to pay more for its building projects in the future.

Being in a state of financial exigency means a university's funding situation is so difficult that the viability of the entire institution is threatened. The status makes it easier for public colleges to shut down programs and lay off tenured faculty, but it also tarnishes the school's reputation, making it harder to recruit faculty and students.

"You'll never get any more faculty," said Alexander, if LSU pursues financial exigency.

The Louisiana Legislature is closing out its meetings this week without having made much progress in finding more funding for universities, colleges and others. Louisiana's higher education community is facing an 82 percent funding cut if no extra state money is found.

The change would bring state funding for LSU from around $3,500 per undergraduate student to $660 per undergraduate student next year.

"States around the country spend more than that on their community colleges," Alexander said.

Lawmakers have yet to move any revenue-raising measures -- either a tax hike or tax credit rollback -- during the session. A Senate Finance Committee is scheduled to take up an inventory tax repeal Wednesday afternoon (April 22) that would produce additional revenue for the state, though passage is far from certain.

The Louisiana House Education Committee has advanced a measure that would allow colleges and universities to more easily raise fees and tuition -- driving more money to higher education institutions -- but similar measures were voted down by lawmakers last year. This year's legislation is not guaranteed to pass.

"We are certainly anxious to see the budget solution as quickly as possible. Faculty decisions and hires need to be made now for next fall," said Sandra Woodley, president of the University of Louisiana system.

Woodley said several of her campuses -- though she would not specifically mention which ones -- would have to file for financial exigency if no additional state funding is found.

If necessary, Louisiana's public colleges and universities will coordinate their financial exigency filings, rather than have 16 to 20 different campuses putting in financial paperwork separately, according to higher education officials.

"If [state funding] doesn't materialize ... we would try to have all the systems going down that path together," said Joseph Rallo, Louisiana's higher education commissioner, of financial exigency.